In this research, a flame-retardant water-dispersed polyurethane resin was synthesized through incorporating phosphonate groups into the polyurethane structure in the chain-extension step. A phosphorus-containing reactive flame-retardant compound was synthesized for this purpose. First, bis(4-nitrophenyl)phenyl phosphine oxide was synthesized and then converted to bis(4-amino phenyl)phenyl phosphine oxide (BAPPO) by reducing its nitro groups into amines. The obtained products were characterized by IR, H-1-NMR, and P-31-NMR, and the thermal properties of the polymers were determined by DSC analysis. The BAPPO-containing polyurethane showed physical properties that were almost similar to those of phosphorus-free polyurethane and exhibited good flame resistance with a limiting oxygen index value of 27. (C) 2003 Wiley Periodicals, Inc.